One of the first questions from potential tenant buyers of our local Baltimore MD rent to own homes / lease option homes is “how do rent to own homes work in Baltimore?”
With a flooded real estate market, especially since the bubble burst of the mid-2000’s, rent-to-own homes have become a popular option for people who are deciding whether to purchase or rent a home.
Renting to own offers advantages to both buyers and sellers.
A seller must have a steady income to make mortgage payments, while the buyer typically has a year or two to organize and secure financing to buy the house.
The Local Rent To Own House Process
Renting a home to own a house is a relatively straightforward process, but there are some caveats that need to be fully understood.
A common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 30 years, then own the home. It’s slightly more complicated that that.
Here are the basic elements of a rent to own agreement.
• The buyer and seller draw up a thorough agreement that covers all terms. This contract will state the monthly rent and a set period of time.
• The renter will have the option to purchase the home at an agreed upon price at the expiration of the agreed upon time period.
By giving a potential buyer a year or two to get their financial house in order, the seller can continue to make mortgage payments on the home, while living elsewhere. This is beneficial to the buyer because, assuming they can acquire financing, they can usually begin customizing the home to meet their needs and preferences. Essentially they get to treat it like their own house and have that sense of home ownership.
How Does The Monthly Rent Work With A Baltimore Rent To Own House?
Laws may vary state to state so it really it depends on the location of the house and any new federal guidelines that may come out that may limit what the property owner of the rent to own house may do.
The standard guidelines of a rent to own house are pretty simple.
- You agree on a rental rate and a future purchase price upon the end of the rental lease sometime in the future (usually 1-2 years).
- You first pay an upfront payment to move in and secure the contract and the terms with the option to buy. The “option fee” or “move in amount” may in some cases act as a percentage of the down payment on the home should the renter decide to purchase at the end of the term. This may or may not be the case depending on when and where you’re reading this article (based on laws). Connect with us directly for the local Baltimore MD Rent to Own laws.
- You pay the monthly rent payment. This is no different from paying rent in any normal rental situation.
- At the end of the rent to own agreement (usually 1 – 3 years) you decide if you want to purchase the home for the price you initially agreed on in your rent to own agreement. If you want to buy the home, great! We can assist you in getting qualified for a conventional loan to buy the home. If you don’t want to buy the home you’re not required to buy the home at the end of a rent to own agreement in Baltimore. The choice is fully yours.
So, for the question of “how do rent to own homes work in Baltimore,” that’s the basic process.
While there are lots of benefits of renting to own a home here locally, every housing option has pros and cons.
Just do your research, talk with reputable and experienced companies like Baltimore Wholesale Property who can walk you through the local Baltimore rent to own house process, and make the smart financial decision for you and your family.
Many people choosing rent-to-own may have past credit problems or may simply be unsure if purchasing a home is right for them. If that’s you and you want to look into the rent to own process and even see the available rent to own / lease option houses in Baltimore MD, click the link below and fill out your basic info to get on our Baltimore rent to own home list.
In an era of uncertainty in the real estate market, many Americans are finding that rent-to-own homes provide them with both flexibility and the option of purchasing a home at the end of the term. By understanding how rent-to-own homes work, you can position yourself to take advantage of the many benefits of renting to own and realize the American dream, despite past credit problems.
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